Lokesh Industries, Pune V. Commissioner of Income Tax (Appeals), VI, Pune

ITA 47/PUN/2023

AI Insights

The case involves Mahendra Shantilal Mutha, the appellant, who faced a penalty of Rs.4,53,566 imposed by the Assessing Officer under section 270A of the Income-tax Act, 1961, for the assessment year 2018-19. The penalty was related to the disallowance of interest on partners' capital amounting to Rs.7,26,870. The appellant did not contest the initial assessment order but later appealed against the penalty. The CIT(A) upheld the penalty, citing the appellant's acceptance of the assessment order as evidence of intent to defraud and evade tax. However, the Tribunal disagreed with this reasoning, emphasizing that assessment and penalty proceedings are distinct, and the appellant is entitled to contest the penalty irrespective of the quantum proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137222 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2023
• Appeal Filed By: Assessee
• Order Result: AllowedAllowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 12-01-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA No.47/PUN/2023 िनधा रण वष / Assessment Year: 2018-19 Mahendra Shantilal Mutha, Plot No.8, Shantinath Banglow, Burudgaon Road, Nandanvan Colony, Ahmednagar – 414 001 Maharashtra PAN : ALPPM7701G Vs. Additional/Joint/ Deputy/Asst. Commissioner of Income Tax/ Income-Tax Officer, National e-Assessment Centre, Delhi Appellant Respondent आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee is directed against the order dated 22-11-2022 passed by the CIT(A) in National Faceless Appeal Centre, Delhi confirming penalty of Rs.4,53,566/- imposed by the Assessing Officer (AO) u/s.270A of the Income- tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2018-19. Assessee by: None Revenue by: Shri Ramnath P. Murkunde Date of hearing 23-03-2023 Date of pronouncement 24-03-2023 ITA No.47/PUN/2023 Lokesh Industries 2 2. Filtering out unnecessary details, it is seen that the AO made disallowance of interest on partners’ capital amounting to Rs.7,26,870/- and thereafter determined total income at a loss of Rs.4.51 lakh as against the returned loss of Rs.11.78 lakh. The assessee did not prefer any appeal against the assessment order. Thereafter, the penalty was imposed with reference to the above disallowance of interest. The ld. CIT(A) dismissed the appeal by observing that “The appellant has not contested the assessment order and has accepted the assessment order. The act of not contesting the assessment order goes on to prove the ‘mens rea’ on the part of the appellant. Therefore, it is clear that there has been an intention of the appellant to defraud revenue and evade tax”. It is apparent that the ld. CIT(A) dismissed the appeal simply on the ground that the assessee did not contest the disallowance in quantum proceedings and hence, had no case against the imposition of penalty. Such a foundation for the dismissal of appeal is totally unfounded. It goes without saying that assessment proceedings are distinct from penalty proceedings. A mere fact that the assessee did not contest the addition in quantum proceedings cannot per se lead to the ITA No.47/PUN/2023 Lokesh Industries 3 presumption that he accepted imposition of penalty as well. The assessee has every right to explain his position qua the penalty in the course of penalty proceedings de hors the fact that the addition was not challenged in quantum proceedings. Here is a case in which the assessee had the assessed loss even after the disallowance. This might have weighed with the assessee for not preferring any appeal against the disallowance. However, this cannot come in the way of claiming or proving that penalty is not called for. Under these circumstances, we set-aside the impugned order and remit the matter to the file of the ld. CIT(A) for deciding the appeal on merits as per law after allowing reasonable opportunity of hearing. 3. In the result, the appeal is allowed for statistical purposes. Order pronounced in the Open Court on 24 th March, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 24 th March, 2023 Satish ITA No.47/PUN/2023 Lokesh Industries 4 आदेश की ितिलिप अ ेिषत/Copy of the Order is forwarded to: 1. अपीलाथ / The Appellant; 2. थ / The Respondent; 3. The Pr.CIT concerned 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे “A” / DR ‘A’, ITAT, Pune 5. गाड फाईल / Guard file आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 23-03-2023 Sr.PS 2. Draft placed before author 23-03-2023 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *